How to: The number one pricing strategy for a new app or service.

It was Back in 1875 that a newspaper called the Chicago Daily news first became responsible for the .99 cent pricing strategy we see in use everywhere today.  Since then we've been trying to figure out new strategies for the incredibly complex problem of price.  Just how people assess the value of a product or service isn't completely understood yet.  To make matters worse, there are a myriad of factors that can influence a customers perception of value all of which completely take the logic out of the buying decision. (anchoring, .99 centing, packaging ).  With that said it can be a nightmare trying to figure out pricing. 

Luckily as an app developer you can do things with your product and price most hard goods retailers can't....A/B TEST infinite price & feature variations of it. 

As a startup, there is no excuse for you to sit on a fixed set of prices and features without testing different variations of them.   Sadly though, I see many developers do this.  The reasons and excuses vary but none of them hold any water.  Just for fun though let's try out a few.

Excuse 1: If we lower/raise our price, our current customers will get angry and cancel their accounts.

Reality: It's not likely many will even notice.  Even so, are you willing to risk your companies entire future because you were too scared of pissing off a handful of customers so that you could find a pricing strategy that worked at scale?

Excuse 2: It's going to take a lot of work to change the pricing in our app or on our website. 

Reality: Well first off you didn't build your app right or you are using the wrong ecommerce tools and this is a BIG problem that should get addressed. That said, you can always test by setting up a mock page and measuring clicks to plans. 

Excuse 3: We've set our prices according to our competitors. 

Reality: Who cares. Your competitors aren't you.  How users perceive your app/service versus theirs is an unknown so how can you use the same pricing?  Maybe your customers think you are better, maybe worse. The only way to know this is to TEST YOUR PRICING!

To update the quote in a favorite sales movie of mine ALWAYS BE TESTING!

If you want to learn more about advanced feature and price testing or have me devise a strategy for you please contact me here